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TMI Blog2022 (8) TMI 668X X X X Extracts X X X X X X X X Extracts X X X X ..... s rejecting the contention of the appellant and making the additions to the returned income and the same is not in accordance with the provisions of the Income Tax Act, 1961. 4. The appellant submits that the impugned order has been passed without following due process of law. The appellant submits that the impugned order passed by the learned authorities in so far as making the additions to the returned income is concerned, is contrary to the law and facts, arbitrary and deserves to be deleted. 5. The learned respondent erred by invoking section 14A, where there is a proper justification for the non-incurrence of any expenditure towards earning exempt income. 6. The learned respondent erred by invoking Section 14A, where there is a proper justification for the non incurrence of any expenditure towards earning exempt income. 7. The learned respondent has not provided proper opportunity to present the facts in the better perspective, which is against the principle of natural justice. 8. For these and other grounds that may be urged at the time of hearing of the appeal the appellant prays that the appeal may be allowed. 9. The appellant craves leave to add, alter, delete ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... had long term capital loss of Rs.37,67,616/- during the year and had short term capital gain of Rs.2,08,090/-. As per section 74 of the Act long term capital loss can be set off only with long term capital gain. Hence, claim of set off was disallowed by the AO. 2.4 Against this, assessee is in appeal before Ld. CIT(A), NFAC challenging the addition made u/s 14A of the Income Tax Act. 1961,who in turn dismissed the appeal of the assessee. Now the assessee is in appeal before us. 2.5 Ld. A.R. submitted that the assessee filed the return of income for the FY relevant to AY 2017-18 declaring a total gain of Rs.29,23,79,900/-. The assessment was concluded on 30.11.2019 with additions amounting to Rs.65,61,071/- to the returned income. In the said impugned order dated 3.11.2019, the AO had made the additions of Rs.65,61,071/- by disallowing certain expenditure claimed by the assessee and the details of the same are captured in the table as below: Sl.No. Particular Amount (Rs.) 1 Disallowance u/s 14A of the Act for non-disallowance of expenditure incurred towards earning exempt income 44,82,700 2 Disallowance of claim of set off of short term capital gain with brought forwa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t or shall not form part of total income 4.3 On careful reading of the above rule for computation of disallowance it is clear that the only those investments have to be considered in which the assessee has earned/yielded exempt income which does not form part of the total income during the relevant previous year, whereas, it appear that the AO has considered the entire investments for want of not submitting details by the assessee. The ld.AR of the assessee also did not furnish details of the investments made on which the assessee has received exempt income as required under Rule 8D(2)(ii) . Accordingly, we direct to the assessee that he will submit the details of the investments in which the assessee has received exempt income during the assessment year and the AO shall calculate the disallowance as per Rule 8D(2)(ii) for the relevant assessment year. A similar issue has been decided by the ITAT Cuttak Bench in the case of M/s. Sankalp, in ITA Nos.415/CTK/2018 and 237/CTK/2019 for the assessment years 2015-16 & 2016-17 respectively vide order dated 21/10/2021, wherein at para 9, it is held as under:- "9. ------------------------ However, in respect of disallowance u/r 8D(iii), ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd that the AO has not complied with the mandatory requirement of Section 14A (2) of the Act read with Rule 8D (1) (a) of the Rules and we respectfully follow the above judicial decision of the Tribunal and remit the disputed issue to the file of AO for re-examination and verification and to decide the issue on merits after complying the mandatory requirement of the provisions of Section 14A of the Act and this ground of appeal is allowed for statistical purposes. 14. From the orders both the authorities below, we observe that the assessee is earning income under different heads, as mentioned above. During the year, the assessee has received dividend of Rs.110,068,076/- and claimed such income as exempt income. The assessee has only made disallowance at Rs.1,20,828/- u/s.14A to earn the exempt income. The Assessing Officer has applied section 14A read with Rule 8D and disallowed the expenditure as per formula provided under rule 8D. The assessee is stated to have made no fresh investments out of borrowed funds. The Assessing Officer appears to have calculated the disallowance as per Rule 8D(2)(iii) observing that administrative expenses cannot be denied to earn exempt income. We, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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